Why Does the 99 Percent Let Athletes, Executives, and Movie Stars Get Away with Huge Salaries?

Occupy Wall Street has popularized talk about America’s 99 percent versus the richest 1 percent. A study by the Congressional Budget Office in October 2011 detailed the growing income gap between 1979 and 2007. It noted that the fast-escalating earnings of the elite in sports, entertainment, and the corporate world had contributed to this increasing gap. In 1985, Neil Postman’s Amusing Ourselves to Death claimed that TV was turning public life into entertainment. Twenty years later, in an introduction to a new edition, his son Andrew argued that all the new media since then had just accentuated the trend.

Our fondness for entertainment (including sports) is nothing new and accelerated following World War I. Large sections of U.S. newspapers were devoted to sports, and some of the largest incomes in the country were eventually earned by sports stars. According to one analysis of the newspaper space devoted to sports in Muncie, Indiana in 1923, such coverage was taking up 13.2 percent of the city’s papers as compared to only 3.8 percent in 1890—by the twenty-first century most U. S. newspapers provided even more coverage than those of the Muncie papers in 1923.

The development of the radio and films in the 1920s gave a strong boost to the popularity of entertainment. Although interwar sports salaries were still small as compared to the millions earned each year by top professional players in the twenty-first century, they were still large for the time. In the late 1920s, boxer Gene Tunney received $1.74 million for three years of boxing, and in 1931 homerun-hitting slugger Babe Ruth earned more than the U. S. president. Tunney’s bout with Jack Dempsey in 1927 was watched by 145,000 people in Chicago’s Soldier Field and listened to by many more on radios in their homes. And the results of such big fights were announced in big front-page newspaper headlines, even in the New York Times.

U. S. silent films with such stars as Charlie Chaplin, Mary Pickford, and Douglas Fairbanks became popular around the world—in the 1920s, they provided 95 percent of all films shown in Britain and 57 percent of those shown in Soviet Russia in 1924. At the funeral in 1926 of silent-film heartthrob Rudolph Valentino, tens of thousands of women turned out, some of them becoming hysterical and fainting, while others were injured in a mob scene at the funeral home where his body was laid out.

Increasingly as the century progressed, entertainers and sports stars earned increasing amounts of money from endorsing products, often with little connection to their professional expertise. Babe Ruth did so in the 1920s and early 1930s; and after retiring, Joe DiMaggio became identified in the minds of millions not only for his past baseball heroics (and having briefly been married to film actress Marilyn Monroe), but also as a spokesman for Mr. Coffee.

In the 1980s and 1990s basketball star Michael Jordan became the leading celebrity advertiser of all time. He not only advertised Wilson sporting goods, Gatorade, and Nike athletic shoes, products an athlete might have some insights about, but he also endorsed a wide variety of other products including those of McDonald’s, Coke, Wheaties cereal, MCI telecommunications, Ball Park Franks, Hanes underwear, Chevrolet vehicles, Rayovac batteries, Oakley sunglasses, and Bijan, which featured a Michael Jordan cologne. His relationship with Nike went far beyond simple endorsements and included his own Jordan brand of Nike shoes and apparel, for women as well as men. A business newsletter in mid-1998 estimated that Jordan would earn about $42 million from his sponsors for a year’s efforts. In its June 22, 1998 issue Fortune magazine estimated that during his career Jordan had been responsible for generating at least $10 billion as a result of his economic impact on everything from increased basketball ticket sales to the promotion of various goods and services.

Sports Illustrated’s2011 “compilation of the 50 top-earning American athletes by yearly salary, winnings, endorsements and appearance fees,” indicated that the top three earners were golfers Tiger Woods ($62,294,116) and Phil Mickelson ($61,185,933), and basketball star LeBron James ($44,500,000). In all three cases, their endorsements earned them far more than their sports salaries and winnings. In the case of Woods $60 million of his earnings came from endorsements.

By contrast, most contemporary film people, including directors and stars, earned most of their money from their film work or tie-ins to it. According to Vanity Fair in 2010 directorsJames Cameron and Steven Spielberg earned $257 million and $80 million, respectively. Cameron’s tie-in earnings included toy licensing fees for the film Avatar, and in Spielberg’s case, Universal-theme-park royalties and consulting fees. The top film star earner was Johnny Depp, who made about $100 million, primarily from three films, Alice in Wonderland, Pirates of the Caribbean: On Stranger Tides, and The Tourist (“one of the year’s bigger flops,” in the words of Vanity Fair).

Advertisers pay celebrities big money because they think we—the 99 percent—are going to be influenced by what they say, even when they pitch products about which they have no expertise. According to the New York Times“last year Super Bowl ads cost companies about $3 million for 30 seconds,” and “Chrysler’s two-minute spot featuring the rapper Eminem was among those that received the most Super Bowl attention last year, and it helped begin what has been a strong sales year for the recovering company.”

To pay $12 million for a two-minute ad might seem like a lot of money to any of my fellow 99 percenters, but then again 111 million TV viewers were watching the game, and at least some of them were not muting the ads (indeed, some people tune in to the Super Bowl mainly for the ads). Besides, advertising costs are just passed on to the consumers when they buy the products companies have paid large amounts to convince them that they need.

Our fondness for sports has also produced big salaries for college coaches. The latest example is the contract announced in late November 2011 for The Ohio State University’s new football coach, Urban Meyer. The New York Times stated that his annual salary will include “$4 million in base salary, bonuses … and lump payments in 2014, 2016 and 2018 [at least $26.65 million spread over six years]. The deal is worth more than three times the $1.32 million that the university’s president, E. Gordon Gee, made in 2010.” The Times referred to aUSA Today story that indicated from 2006 to 2011 the average pay for major-college coaches jumped from $950,000 to $1.47 million, an increase of almost 55 percent.

One former college president quoted by the Times stated that “there’s an unrestrained salary march, where universities are trying to superimpose an entertainment industry on an academic structure. Any salary in that range [of Meyer’s] is excessive.” But The Ohio State president defended the salary by saying that “we live in a world of markets and opportunities.”

In the final analysis, top-notch entertainers (including sports figures), like the corporate elite, earn astronomical salaries because of their presumed market value. And who drives the market? We—the 99 percent—do. As long as we’re willing to pay what we do to be entertained, whether in stadiums, arenas, movie theaters, on TV, or other venues, then the elite entertainers are going to earn the big bucks. When Babe Ruth was asked about earning more than the president, he responded, “I know, but I had a better year than Hoover.” But it was not just having a good year that earned him his salary—his $80,000 in 1931 would be worth a little over $1.1 million today—but many Americans valued him more.

What we spend our money on reflects our values. If many of us value college sports more than the quality of a college education, then football coaches are going to earn more than professors or even college presidents. The French thinker Joseph de Maistre once wrote that “every country has the government it deserves.” A cynic might paraphrase by saying “every society has the economic inequalities it deserves.” Or perhaps more appropriately, we could quote the cartoon character Pogo, “WE HAVE MET THE ENEMY AND HE IS US.

About Walter G. Moss

Walter G. Moss is a professor emeritus of history at Eastern Michigan University. His most recent book is An Age of Progress?: Clashing Twentieth-Century Global Forces (2008). For a list of all his recent books and online publications, including many on Russian history and culture, go here: http://people.emich.edu/wmoss/pub.htm

Comments

It seems that the author and most of the other commenters can’t imagine doing without movies or spectator sport events or for that matter mass concerts – in short living like hundreds of millions of folk even in today’s world, not to mention almost everyone before 1900. For music I am content with six intimate chamber concerts in a year and otherwise to make my own or tune to classical radio. As for movies, maybe once or twice a year, and spectator sports none at all. You see, for me, life is short and I am busy and have my own life to lead and body to move and hikes to take, without much incentive to instead strive to be ‘entertained’ by watching someone else doing their mock or unusual version of these things. So for me, ‘entertainers’ and for-display-athletes command little market value.

So much for the supposedly homogenous ‘we’ that allegedly is uniformly responsible for high-salaried entertainers and athletes.

I kind of agree with Mark, I’m sorry to say. The only way to solve this through the market would be to stop watching movies and sporting events and buying products. That would only cause unhappiness for us but hurt the people who work in the ancillary jobs that make those movies, games and products. There has got to be another way to get people to value more “worthy” pursuits.

Mark makes some good points but then falls into sophistry with his rambling about how he feels about celebrities himself and then generalizes to us and We. It is more honest to point out that they work at their sport or profession and that often their careers are not very long although of course the exceptions are out there. I agree that a lot of folks will pay big money to watch others do sports, theater and such instead of getting off their rears and doing things themselves.

(FYI disclosure) I went to University out of high school with an athletic scholarship and I still like athletics and athletes as well as other friends in the arts but I would tell them face to face that many at the top are over paid versus the social worth of their product. In general I feel, personally, that teachers and educators are more valuable than most athletes and other performers — we trust our children to educators who provide them with many of the skills necessary for a decent life and yet we pay educational workers much less than athletes.

Sophistry? “The use of fallacious arguments, especially with the intention of deceiving?” Dusty misunderstands what I was trying to say. As a matter of fact, I was not speaking about how I feel about celebrities myself. My own personal opinion is actually to the contrary.

I was using what I consider to be a more considerate literary device by employing the first person plural to speak of Americans or human beings as not something apart from myself, lest I be perceived as arrogant and seeing myself as somehow intellectually superior to those who enjoy aspects of entertainment that I do not.

I was saying that a large percentage of Americans, indeed a large percentage of human beings are enthralled by movies and sports and they are willing to pay to see them, even in difficult economic times; especially difficult economic times.

It is a good point that Dusty notes that these highly paid performers may work at their sport or profession unpaid for many years and that often their careers are not very long. But then the point is missed when it is assumed that everybody who enjoys watching professionals perform, don’t engage in those activities themselves. A mighty big and erroneous assumption. Can we presume that no one enjoying a ballet performance is a dancer?

Dusty’s estimation of the social worth of athletics is a personal value judgement, an opinion. I too believe teachers should be paid many times what they are currently. But we’re comparing apples and oranges.

On the one hand, “we” (us Americans, not necessarily me personally), are as individuals happily willing to buy movie and sports tickets, pay for on-demand satellite and cable TV and rent DVDs to the tune of billions upon billions of dollars to pay the millions upon millions of dollars in salaries that we love to gripe about, to the athletes and movie stars.

On the other hand, as a collective we refuse to elect politicians or vote for referendums that propose to raise a fraction of what is spent on entertainment in taxes to pay teachers what they deserve. An interesting question is, would people agree to higher taxes if they were required for sports?

At least sports and movie stars give us something in exchange for their wealth. They actually earn it. The real problem is the elite club of inherited wealth. People that acquire money by accident of birth. The ones for whom the sports fans are so vehemently fighting against the “death tax.” Huge sums get passed down from generation to generation that permit wide branches of many rich families to provide countless trust funds to legions of their progeny that are so large that these kids can live like royalty off the mere interest.

And then of course there are the bankers and traders on Wall Street who seem to pull money by the stadium full out of thin air because they actually do pull it out of thin air. They produce nothing. They build nothing. They create nothing. They make phone calls, tap keyboards and take meetings. And their wealth dwarfs that of entertainers.

So I’m just saying, go after these lazy freeloaders before you get down to the hard working folks who, while maybe their salaries seem unreasonably high to you or I, are at least contributing something to society.

Sorry for the personal attack. When there were so many We(s) I just reacted a bit much. I liked your article and am glad that you put it out here for us — look how it has generated comment. Keep up the good work.

Mark — I just realized after apologizing that in my original input I mistook your name for the name of the author of the article and I was making my jabs toward him. Well anyway I think the article is good as well as your comments. I guess I stirred controversy that I didn’t even want or mean. Sorry.

On the other hand going to one of the points in the original article about the payment of money from corporations to celebrities I would point out that advertising is a business expense so it is cheap to give away money to sports stars and then let the rest of us, the 99%, pay more taxes so business and the wealthy can pay less. I would venture to guess that if advertising costs were not expense deductions from revenues then corporations wouldn’t give so much to celebrities and/or other costly advertising.

I think going after athletes and movie stars is barking up the wrong tree. The odds of joining the ranks of the very few highly paid elite of either profession is infinitesimal. They would no doubt argue that they are so richly rewarded precisely because it is so extremely unlikely for any but the most talented, aggressive and incredibly lucky to reach the lofty heights at the top of their fields.

It is not only we Americans who love our stars. Football (soccer) stars from Mexico to the tip of South America to all of Europe also rake in huge salaries. In India, movie stars are virtual royalty. We human beings love our iconic symbols of human perfection. We experience the victories of the athletes vicariously and live in the fantasy world of the actors.

They take us away from the drudgery of our mundane and often painful lives, even if only for a few hours. We stop being insignificant and temporarily become part of something bigger and brighter for a little while.

So we don’t care that they make a lot of money. We want them to be rich. We want them to be rewarded for the particularly valuable service they perform for us. They let us imagine the best of what humans can do. That somehow there is something to look forward to. Even if it’s just the game on Sunday.

I could be wrong about all this. But the billions of dollars we voluntarily fork over to witness their performances and the millions they demand and receive to perform, suggests there may be something to it.

Wellness

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Environmentalism

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